Insurance benefit(s), or coverage, typically refers to a contract, wherein an insurance carrier agrees to pay for insured financial losses resulting from a specified event. Such insurance benefit(s) is a commodity that many people purchase for peace of mind or because local laws require such coverage. Thus, most people might consider insurance as something that is necessary and, at times, undesirable due to insurance premiums.
Rates of insurance benefit(s), such as car insurance rates, are typically determined based on desired benefit(s) and various factors related to the prospective beneficiary that are mostly historical and rather limited. In general, the insurance company determines insurance costs based on insurance models that classify segments of the population in groups sharing similar data, such as data on features of beneficiary (e.g., health condition(s)) or property intended to be insured (car make and model, car color, car features, whether the car is garaged, estimated miles to/from the office, etc.); demographic data (e.g., age group, sex, marital status, educational background, ethnicity); historical data related to intended insurance benefit, which can include driving history as recorded primarily based on an event basis (accident(s), ticket(s) for traffic violation, processed claim(s), etc.); environmental factors related to where the prospective beneficiary lives, which is commonly factored in through ZIP code and available information thereof, recorded appraised value of property, crime rate in the area; and so forth. Members of a segment are not distinguished for assessment of insurability and related cost. While such approach has the advantage of simplicity, it fails to incorporate variance(s) that exist amongst members in same segment, and hence squanders valuable data related to each individual's unique traits that can further affect respective insurance benefit(s) rates. More importantly, in some cases, the segments upon which rates are determined do not adequately represent a prospective beneficiary's potential coverage liability. As an example, with respect to motor vehicle insurance and for a specific segment, a first operator of a car may commute to work using inner-city streets while a second operator of a second car can commute through a highway.
In addition, many insurance consumers do not associate any loyalty with a particular insurance carrier, particularly those such as motor vehicle insurers, which commercialize highly commoditized insurance benefits. Thus, to find better coverage, lower rates, or both, a large number of insurance consumers frequently evaluate alternative providers of insurance benefit(s) with respect to the provider currently supplying the insurance benefit(s). As a result, insurance providers, or insurance carriers, aggressively pursue service and benefit(s) differentiation, regardless how marginal, in order to mitigate prevalent consumer attrition.
Moreover, most insurance benefit(s), such as motor vehicle insurance coverage, provided by conventional insurance carriers is typically rigidly priced and billed in relatively long time scales, e.g., in monthly or semi-annually periods. Rates occasionally fluctuate, but commonly, fluctuations only occur at the end of such relatively long time scales and can be based on additional factors unrelated directly to features or characteristics of the beneficiary, e.g., an automobile owner. Accordingly, adjustment to insurance benefit(s) and pricing thereof can significantly fail to timely accommodate changes to beneficiary's needs or be supplied at a fair price-point.